Impact Hub Berkeley’s “From the Ground Up” is a four part, year-long program that brings together multi-stakeholder organizations working in sustainable food and agriculture to collaborate on joint initiatives. The change accelerator combines dynamic innovation salons, public-facing education programs, and community building events to drive systemic change in the following areas: (1) Collaborative Trade, (2) Living Oceans, (3) Soil Health/Carbon Farming (4) Local Food Systems.
Session 6: Tools for Transparency and Choice
Collaborative Trade is fundamentally about people, and providing opportunities for each person to help create systems that work better for everyone involved. Each session surfaced wisdom that together created a holistic understanding of the system we want to change. The third topic for sessions 5 and 6 focused on “The role of technology, tools and strategic partnerships.”
Session 6 followed a “mastermind format” where 2 leaders in the sustainable cacao industry each presented a challenge as a topic for participants to discuss and provide recommendations based on their experience and expertise. The session gathered 11 leaders from technology companies and organizations committed to improving transparency and farmer livelihoods.
Part 1: Greg D’Alesandre, Dandelion Chocolate
Part 2: Dan Domingo, ECOM
Tuta Aquino, Prime Cacao
Whitney Gantt, Grameen Foundation
Anselm Ibing, Open Food Network
Amoin Kouakou, Consultant: Translation & Stakeholder Management, Former Fair Trade
Julia Pope, Hylo
Rosi Quinones, Royal Coffee
David Sypnieski, Athena Intelligence
Arianna Valentini, We Farm
Edward West, Hylo
Laura Ostenso, Knowledge Driven Agricultural Development Project USAID
Participant Bios and Resource links provided
Part 1 – Overview
Presenter: Greg D’Alesandre, Dandelion Chocolate
How can Dandelion best show cacao pricing including price paid to producers in an ‘apples to apples’ comparison?
Pricing information without an understanding of context or reason for price differences across organizational structures, services, countries, inflation could be misunderstood. Producers worry it may paint them in a negative light if shared and misunderstood.
There are very few static metrics.
How to best explain that commodity chocolate and specialty chocolate are 2 very different products.
For consumers, what information is most important to share in a report? How do you present the information in a way that the average consumer can digest it?
Use technology to give a voice to the farmer. When farmers have ways to ask questions and gain responses directly from relevant or trusted sources, they are more engaged and empowered in their decision making.
Create narratives over the years from each individual source, tracking how their particular situation is changing, rather than comparing between sources. This becomes a tool for awareness, engagement and learning, as information is continuously gathered.
Bring stories to the farmer from the consumer as well to the consumer about the farmer to equalize the playing field between farmers and consumers.
Create community online to showcase a product’s brand about the power that chocolate can give farmers in terms of their livelihood regardless of the price they’re getting and also the “joy” chocolate brings to consumers, because it really does.
Show what paying above commodity prices enables the producer to achieve. What are the strengths of the exchange? For example, what are the benefits to that specific community as a result of more bars sold?
Ask the producers what their personal and business goals are. What do they want to do as company, as an operation and then report that as a metric that you’re continuously improving year to year.
Show that cacao is an ecosystem of people working together to make chocolate or this great thing that makes people happy and sharing how each person is happy is very powerful.
Part 2 – Overview
Presenter: Daniel Domingo from Ecom Trading Company
How best to present market information (price, quantity, harvest time) in a meaningful way for both the farmers and end users of cocoa without standards, qualifications of what is “specialty” in place?
There are a lack of standards and proven models of speciality cacao.
Without standards in place it is hard to account for market information and coordinate market.
It is difficult to identify the demand and price for differentiated product in order to reward the farmer and import more efficiently.
The number of requests and inquiries from chocolate makers are growing in size and complexity of questions asked making coordination of specialty market players increasingly challenging.
Because ECOM holds information from both the buyers and seller, they could help to standardize terminology and ways to define various speciality products.
Institute more specific information about cacao.
Create a minimal framework to set standards for cacao to leverage that infrastructure for retailers, marketers, producers.
Implement a decision making process to help coordinate markets so that both makers and producers are on the same page and understand sourcing requirements and availability.
Redesign frameworks by use of technology to improve matchmaking and ultimately collaboration.
Before diving in, the group provided a round of introductions providing context of their work and interest in the session.
Anselm Ibing, a Community Manager for the Open Food Network kicked us off,
“I’m from Germany but I’m calling from Atlanta where I’m at the National Food Hub Conference. Open Food Network (OFN) is an open source software project that operates at a global scale yet it is mostly designed and used to manage local food systems. The platform facilitates the process of setting up or managing local food ecosystems where food hubs can trade with one another across the network helping to decentralize the food system.
My role is a Community Manager and I respond to requests of those who want to set up the OFN platform in their country and area. The platform is all about collaboration, getting the different actors that are currently working side by side to collaborate and all on a human scale. Specifically, it allows for even cross-country economic trade relations by using technology to aggregate orders. I’m happy to be able to take part in this, to listen in, and hear the challenges and I’m excited to meet you all.”
Arianna Valentini calls in from Peru, “I’m a Latin American Programme Manager for We-Farm. We-Farm connects smallholder farmers in Latin America, Asia and Africa so that they can share information and access answers through the internet. Our service geared towards the 500 million smallholder farmers that did not have access to the internet in the developing world. Related to development there is a common perception that we should tell farmers or people in those worlds what to do but WeFarm works to share the knowledge that these people already have, because they have a huge amount of knowledge. We crowd source this information and best practices from people directly to help small-holders farmers throughout the world improve their lives. We help NGO, institutions, governments and everyone that is related or that has a relation with smallholder farmers throughout the shine a light to effectively and efficiently communicate with farmers from wherever they are.”
Dan Domingo introduces himself, “I work with Ecom Trading. We’re commodities traders who have been around since 1949. We’re one of the larger traders of cocoa here in the US. We’re probably the largest supplier to the specialty chocolate industry. I’m in charge of sourcing and sales for the specialty chocolate industry among other things. I’m interested in hearing what we can do as far as relaying information using technology.”
Laura Ostenso shares, “I’m currently with USAIDs Feed the Future, a Knowledge Driven Agricultural Development Project. Essentially, I am a Knowledge Management Specialist there and my job is to work to instill good practices across value chain projects that USAID Feed the Future program is funding. Feed the Future is Obama’s major food security initiative that USAID, the United States Agency for International Development administers. Prior to that I worked at the World Cocoa Foundation as the Manager of CocoaLink, which at the time was a new SMS based program that reached in the end over 50,000 farmers with information on good agricultural practices and good management practices and included some side innovation such as holding remote extension sessions with farmers in small areas. Overall it was productivity minded for smallholder cocoa farmers in Ghana that was funded by the Hershey Company. Essentially, collaboration is a part of my current job, an integral part of it now and was before at the World Cocoa Foundation, and I’m looking forward to hearing from other people, particularly around cocoa and coffee supply chain, in terms of what collaborations are working and what more innovations are needed, so thank you for inviting me.”
Steve Farone calls in from Seattle, Washington. “I’m a consultant and I work on performance measurements and business intelligence systems for sustainable businesses, some in food, some in cocoa and some elsewhere. I joined this group for the first time in your last session to talk a little bit about my work with the World Cocoa Foundation and the Bill and Melinda Gates Foundation. Most of everything I work on is a collaboration or a partnership of some sort, that’s sort of my specialty. I’m really interested in hearing what’s new with people in terms of needs or systematizing data that is involved with supply chains and sustainability, probably understanding smart targets to reduce the clutter of information we have and learn to focus on the right things together.”
Whitney Gantt introduces herself, “I’m really happy to be here today and join the conversation. I’m the Director for Mobile Agriculture at the Grameen Foundation. What we do in the agriculture space specifically is work with local partners to identify the challenges that prevent partners from being more profitable as well as having improved food security. With those various partners we convene different actors across the agricultural and financial sectors to innovate new solutions that use mobile technology and leverage field agents who are able to go beyond the traditional reach of agricultural programs. We look at ways to lower the cost of service delivery and create integrated feedback loops that allow more holistic solutions. For example, solutions that use Agribusiness data can open up access to financing for smallholders and connect the dots between the input financing information and market needs that they have.
In terms of collaboration, again, almost everything we do is delivered through partnerships so very fundamental partnerships and we’re always looking for both private and public sector players who have a need to innovate using technology. In terms of the innovation that I would be most excited about, I think it’s on the forefront of our minds right now is how do we link all the sustainability data that’s coming up the pipeline based on customer and company needs and link that back to deliver value to the farmer in terms of improved access to financing or improved productivity benchmarking and getting that feedback loop fully developed.”
David Sypnieski introduces himself, “I am the Founder of Athena Intelligence. We are an early stage startup company that focuses on providing business and risk intelligence to the food supply system. We’re focusing on the food production, the processing and manufacturing side of the food system. My background is in what is called ag/tech. I’ve spent many years talking to growers, and processors and manufacturers and worked in sustainability initiatives from Walmart to USDA. Obviously, I’m in the right room because we’re all trying to do the same thing. About a year ago, I decided that I had a vision about how to deploy technology to enable an efficient and contextual data driven dialogue between the producers to the retailer and started that company; that’s what Athena is.”
“Our first customer is Campbell’s soup, where we are delivering supply chain intelligence on risk and we basically aggregate all the publicly available data that is applicable to food production, synthesize that with privately generated data that Campbell’s soup has and their suppliers to provide a highly contextual display or reporting of the production setting and the risks to those production settings. Our clients can have a collaborative and highly contextual discussion with their supply chain in how to align the production of their supply towards corporate goals, whether it be profit, sustainability, risk mitigation, etc. We’re just trying to make it a better world.”
David added, “People talk about value from field to fork but value needs to move from fork back down to field for true sustainability to happen.”
Tuta Aquino chimes in, “I’m actually at the bottom of the food chain here [laughter]. I’m a farmer based out of Brazil. Although I was born at a cacao farm and my family has been in the business for the longest time, my life took me somewhere else for many years but surely brought me back to this amazing tradition. The region where I come from in Bahia, Brazil has been devastated by a plague in the past couple of decades. Before that Brazil was once the largest producer of cacao in the world. It’s a challenging business and we can talk a lot about this. I was very curious about today’s session and have been following a little bit about what Nancy has been doing with Yellow Seed. I think it’s an incredible initiative to be able to see how other people are looking at the cacao farming and how they want to make it fairer especially for the farmers. I’m trying to give back a little bit of my recent knowledge. I’m so happy to be participating in this whole process.”
Rosi Quinones introduces herself, “I work for Royal Coffee, a coffee importer and great family owned company that imports green beans for the specialty market. I’m an Agronomist from Peru and I work in coffee, but I love cocoa [laughter]. As green coffee importers we receive offers for cocoa all the time. In this occasion, I decided to bring my new friend.” She gestures to Amoin.
Amoin Kouakou waves, “I’m Amoin Kouakou and I consult for English French translation as well as stakeholder management. I’ve recently been working with a small producer organization that is seeking representation of the cocoa farmers on the world stage. I used to work with Fair Trade USA where I was in certification working with producers and exporters at origin for cocoa, coffee, coconuts and other products in Latin America, Africa and Asia. I am from the Cote D’Ivoire or Ivory Coast in English, the biggest producer of cocoa in the world, and my family has been involved in producing cocoa for a long time.”
Edward West and Julia Pope introduce themselves during part 2. “Hi everyone,” I’m Edward West and this is Julia Pope. We work at an organization called Hylo. Hylo helps turn communities that share a goal or purpose into a collaborative network. So we work with clients like start-up accelerators or large non profits that have hundreds of members, co-working spaces – any group that has some kind of a common goal, but is too big for the members to all know each other. We help these groups facilitate resource sharing, information sharing, connection and collaboration. I know that for Nancy some of the things she has been thinking about for the future of Yellow Seed involve a kind of collaborative network of resource and information and skill exchange across a variety of different stakeholders. So we have been exploring how that can serve some of the context that you guys are deeply involved in and that she is involved in as well. Really happy to be here.“
Greg D’Alesandre says hello to the group. “I know some of you already. I’m the Chocolate Sorcerer at Dandelion Chocolate. It’s a funny title I basically use to say I’m responsible for all the sourcing. Dandelion Chocolate focuses on single origin, two-ingredient chocolate. Our goal is to essentially have the best expression of the flavor of the beans we use so our goal is not to make homogenous chocolate but make very unique, individualized and intensely flavored chocolates but just out of cocoa beans and sugar. We feel very strongly that there’s both a market for it but one of the things we like about it is it really connects people to the origin of the cacao much than if what they’re eating tastes like everything else they’ve ever eaten.”
“We do focus on retail more than we do on wholesale, just to give you a little bit more background. As a company, our goal is not to produce an enormous amount of chocolate and have it on store shelves everywhere but rather to have a larger number of our own retail stores and again, part of this is to be able to connect more closely with our customers. Our three goals as a company are first and foremost to try and make some of the best chocolate in the world, secondly is to try to have some of the best chocolate related experiences in the world and third is to have a healthy, profitable, sustainable business and that order is important. We don’t want to make worse chocolate to become more profitable. That’s never our goal. If we wanted to do that, we would do something else.”
Part 1 – Mastermind with Greg D’Alesandre from Dandelion Chocolate
Part 1 Challenge:
How can Dandelion best show cacao pricing including price paid to producers in an ‘apples to apples’ comparison?
Greg leads us right into part 1’s discussion and challenge, continuing:
“To that end, we have no certifications. We’re not organically certified, we’re not Fair Trade certified. The reason for this is mostly because of the producers we’ve spoken to. They are not excited about the certifications other than they believe the certifications open up their market. One of the main things certifications provide is trust with the consumer. It gives you the ability to say, ‘I have no idea who Dandelion Chocolate is but I know who Fair Trade Certified is so if you’re Fair Trade Certified, I don’t need to trust Dandelion Chocolate.
“Rather than essentially having people pay a lot of money to help open up markets to us, our goal is we should put the effort into doing the sourcing and to try to build this trust directly with our consumers. There is a number of ways we can do this. One is that we have a commitment to do our best. We falter at times but we do our best to visit all of our producers at least every other year. Even when we’re not visiting, we stay in very close contact with the people we’re working with around the world to source so we know what’s going on with them, we know what the challenges are, we can set our goals to be the best partner possible for them.” Greg gestures to Tuta, “very much to the point you made which is we don’t believe the producers are bottom of chain, we believe they’re top. We wouldn’t exist without producers. Literally, we wouldn’t exist at all and so, from that perspective, we feel like we need to be a good partner, not a good purchaser. “
To help building trust and transparency, we do a sourcing report, which is essentially equivalent to a transparency report in coffee. In it we talk about the producers we work with, we talk about how much we’re paying for the product we’re purchasing whether it can be cacao or sugar. We talk about how much we purchase, we talk about how much we pay for it.
“One of the best ways to build trust is by being transparent and open, and giving people information, and essentially helping people to learn.”
The world is an incredibly complex place and there is a lot of information we want to provide because we think one of the best ways to build trust is by being transparent and open, and giving people information, and essentially helping people to learn. A lot of our customers have no idea how a cacao chain works and we want to educate them on the fermentation, growing and economic details that tell that story.
In this year’s report we talk about our supply chain more, including when we are importing directly. I think people have this lovely, romantic fantasy about direct trade but the reality is there’s a lot of logistics and people involved. We want to expose more of this story but we want to do it in a responsible way. The challenge that we have is how much people get paid for doing what is in many ways the same thing varies widely depending on country and context.
“How much people get paid for doing what is in many ways the same thing varies widely depending on country and context.” ~ Greg
No two sourcing stories are alike. “There are complex differences between how somebody gets paid for wet beans versus fermented beans or as an employee versus as a worker of a co-op or someone on a single estate who own the land.. How do you compare those two things to each other and how can you write that up in a way that is not misinterpreted? For example, the guys we work with on Dan’s team are great. They basically started an operation in a village in Tanzania, they’re the only employer in that village. They’re bringing a lot of money into that village and it’s awesome but they also are a little hesitant for us to say how much they’re paying for the wet cacao in our report. They are worried that if someone compares that to how much one is paying for wet cacao in Brazil, it’s going to seem like they’re ripping off the farmers. But they’re not ripping off the farmers. They are both making a real living wage, but in Madagascar they are getting land and money and in Brazil they are getting money as an employee.
“This complexity presents a big challenge for us. How do you try to make all of this ‘an apples to apples’ comparison? In the end, for us to succeed in doing responsible sourcing we need to educate people more about the product that they’re consuming. This includes how do you understand that someone being treated fairly? I think this is one of the places where a lot of the certifications fall down. They have very specific metrics and rubrics but to answer the real question of fair treatment is a very difficult one.
We have a lot of information but we don’t know how to present that information in a way that is fair to everyone so that people are not either vilified or seen as heroic when everyone is all trying to do the fair thing. Does that make sense? What do you think, is it a good challenge?” The group nods in agreement.
Part 1 – Clarifying Questions
Tuta asks, “Why is it really necessary for you to divulge the financials of it? What does that bring?”
Greg replies, “It’s a good question. We don’t necessarily feel like it’s important to go into the detailed financials of all of the partners we work with, but I think there’s a challenge that everyone hears a lot of news out there of cocoa farmers that aren’t getting paid enough and consumers note what we’re charging for our own chocolate. Right now what you can see is how much we pay for each of the different origins and it varies by almost 75%. The minimum we pay is $5500 per metric ton, the most we paid last year was around $8500 per metric ton. We want to help people understand that the variation is not because someone did a better job negotiating, but rather because there are distinct reasons why people are getting paid different amounts. I also think it helps educate our consumer on the fact that you’re still talking about people getting paid a very small amount of money to do a lot of work. Even us as people who are paying a relatively large amount for these beans are still paying a very small amount of money for a lot of work. This is something that we want to promote. I feel like an informed public is one that can make better decisions about how they want to spend their money.”
“We want to help people understand that the variation is not because someone did a better job negotiating, but rather because there are distinct reasons why people are getting paid different amounts.” ~Greg
“We have a lot of descriptive text around the partners but part of the thing we’re trying to get into is; if you see a report of nine different origins, $5500 /MT to $8500/MT in pricing, there’s an obvious question that everyone asks which is…’Why?’”
Whitney suggests, “Yes, what is essentially the percentage difference or delta that they’re getting for selling to your supply chain versus if they sold them to the average market.”
Greg: “Honestly, the challenge with it is there is no average market for most of the places we work with. Belize only exports 80 tons of cacao a year and so it’s very difficult to say what an average price would be there because a lot of the tradeoff people are making is between cacao and some other product. One of the things we have looked at is if we talk about the living wage or cost of living in these places, but even that gets really complex. I think the percentage question is an interesting one. Ecuador is easy because there’s a lot of cacao produced in Ecuador. Guatemala is difficult because in Guatemala, most of it is not exported so you’re talking about an internal market versus selling to an external market. In Tanzania, nobody else is near these guys and everything else is being sold in a different part of the country and again, the thing I worry about is it doesn’t help people understand the structure of what’s actually happening because it’s not as if the farmers who are working for Kokoa Kamili, our partner in Tanzania, could go and work for somebody else because they’re hundreds of miles away from anyone else who is doing anything like this. I think that’s the challenge with looking at percentage of a local market because local markets…there isn’t always one.”
Arianna asks, “One of the most common questions we receive [on WeFarm platform] for cacao farmers is what is the price of cocoa for example? We receive this question many many times a week. It’s quite different, the price the farmer will be paid depending on the coop or the services associated so it’s very hard to give a specific price for cacao or for any other product for that matter. It fluctuates so much between different areas within the same country even.
Greg says, “I couldn’t agree more and from my perspective, one of the things that we think about is would it be useful for people to understand when we say we’re buying this from a co-op, then it sort of gives them a mindset of the price translates more into a type of payment structure versus you’re paying a single estate. At least we can do that but different co-ops work differently and distribute money differently.
I (Nancy) ask, “Who are most of the merchants that you’re working with selling to before they meet you?”
Greg replies, “That’s a good question. About half of them were selling on the European market more cheaply. For example, Camino Verde in Ecuador, used to be selling in Switzerland and getting a lot less money. Now he’s happily selling to more and more chocolate makers in the United States who are willing to pay more money for what is in essence the same product. I think that’s half of them. The other half are people used to be essentially selling to you know ‘coyotes’ when they could. Now they’re starting to work on improving the quality to sell to a larger market. We’re a much smaller market but a market where they can get more money. This only works if you’re only trying to sell tens or hundreds of tons, not someone who is trying to move thousands of tons to sell to the craft chocolate market because there’s no one there to buy it.
Whitney adds, “Going back to the percentage, it would be very easy to say…’the market price is X. I pay this much over the market price.’”
Greg agrees and adds, “Which is what everyone does.”
Greg adds, “I think one of the things that we try desperately to do is help people understand that bulk cacao and specialty cacao are not the same product.”
Rosi chimes in, “And they shouldn’t be treated that way.”
Greg agrees, “Cacao and cocoa are not sold and traded the same way and they’re not produced in the same way. They’re basically different products.”
Someone asks, “What is static? When you pay these varying amounts, what is static to that decision to pay?”
“We aren’t setting the pricing, the producers are setting the pricing, which we believe very strongly is the right structure.” ~ Greg
Greg adds, “Honestly, how we arrive at price is we either find somebody who is making a product that we really like or we work with someone to get the product to the point that we really like it and then they tell us how much they want for it and we pay them that amount of money. We aren’t setting the pricing, the producers are setting the pricing, which we believe very strongly is the right structure.”
Someone summarizes, “So your metric is ‘we like it?’
Greg agrees, “Yes, that we believe we can make good chocolate out of it and sell that chocolate.”
Rosi clarifies, “If it tastes good.”
Greg continues, “I make a big differentiation between flavor and quality. Quality is something that people look at in bulk cacao as fermentation percentage, moisture percentage, bean size and we certainly look at quantity of rocks, and quantity of broken beans and flats, but beyond that what we care about is flavor, not the typical definition of quality. The interesting information is what does it taste like?
David asks, “Is there something that’s unique to them to make it to your specifications? Clearly there’s something that they’re doing.”
Greg clarifies, “For us, it usually means someone is putting a lot of time and attention into the fermentation and growing side of things.”
David clarifies, “Is that something that could be mobilized across the supply chain? That extra time?”
Greg adds, “It just means that people have to be willing to do it. That’s the hard part. It’s the same question of why doesn’t every craft chocolate maker in the world taste great? It the same thing. We sort all the beans by hand. A lot of people don’t do that because it’s very time consuming and expensive and a pain in the ass so I don’t blame people for not doing it. I think it’s the same thing for fermentation and drying. To ferment well, for instance, you need to understand the temperature and turn the beans when they hit the right temperature. A lot of people are like…Yeah, so I’m also a farmer and I’m also feeding my family so I can turn them at 6:00 in the evening when I get back. That’s the time I have to turn them. I can’t just stand around all day watching these beans and figuring out when to turn them. While I understand that, that does impact the quality. The answer is you can standardize the practice you put in place and people who are willing to do the work can learn the work to be done and create great tasting cacao but I think there are people who do the work and the other challenge is they have to find, and this is where Nancy and I have talked many times over the year…then they have to find someone to buy it. Let’s say now you have great cacao.”
Whitney asks, “What do you feel like the higher price that you pay farmers enables in terms of really generating value? Or what do you ultimately expect farmers to experience as a result of being in your supply chain?”
“What do you ultimately expect farmers to experience as a result of being in your supply chain?” ~ Whitney
Greg replies, “Honestly, what we would like long-term is that cacao farming is a sustainable profession. The reason we want to make sure we’re paying appropriate amounts of money is that it can be someone’s livelihood. It’s the same reason we want to pay our staff enough money so they can live and not have to be like…’Well, I really like Dandelion but I can’t work there because I can’t make enough money to live.’ I think the cacao farmers we work with are an extension of that. They need enough money to live and we need for them to tell us what that amount is because honestly they know better than we do and that’s why they set the price. So our initial objective is so that it provides a sustainable livelihood for everybody.”
Amoin asks, “who is the audience of your sourcing report?”
Greg replies, “Honestly, a lot of cacao producers read it. I’m actually shocked at this. When I went to Brazil last year, I ran into about six different cacao producers who were like…’So, in your annual report you said x’ and I was like…’I’m sorry? You read the annual report?’ We’ve got a number of producers who read it but the major audience is consumers.
Amoin inquires again, “and how sophisticated is the consumer’s understanding of the complexities of it?”
Greg adds, “I would say for the most part they understand basically nothing and that’s the reality. There’s still a portion of people who come into our factory and ask why we have guys with coffee beans. We’re like…’No, those are cocoa beans,’ and they’re like…’What’s a cocoa bean?’ People will pick up dry pods in our shop and be like…’Oh, is this a cocoa bean?’ ‘Nope, that’s a pod. Cocoa beans are inside there.’ A question we answer all the time when people are like…’The Belgian beans are the best’…and we reply, ‘But, there are no beans in Belgium.” I say you’re really starting from scratch with most people.
“While everyone makes assurances of having the producer’s best interest at heart, those spaces tend to look like this meeting today, the producer is not at the table.” ~Amoin
Amoin asks, “I’ve been in a lot of spaces where cocoa and the fate of the producer are discussed. And while everyone makes assurances of having the producer’s best interest at heart, those spaces tend to look like this meeting today, the producer is not at the table.” It would be like… imagine this, you get a bunch of men at the table discussing the welfare of women and literally defining feminism. They wonder how to measure the improvements that they’re making in the lives of the women and throw around metrics suggestions for how to measure the progress they’ve caused in the lives of these women. Shall we keep track of what they do with the additional money we pay them? Shall we count how much more or less they use birth control as a progress metric? Would the women feel empowered, –empowered, a favorite word of the Western good-will workers –would they? I’d like to first of all invite people to take stock of the absence of the producer at the table and go from there. That said, how much access do your producers have to market information?”
Amoin adds, “And second, a lot of the actors in the middle of the chain, from traders and manufacturers to foundations, certifiers and other non profits, seem to want to have these 30 seconds tops conversations with a consumer who they assume to have too short an attention span to be burdened with information that may come off as too complex. This is actually a disservice to the consumer, as the infantilizing of both the producer and the consumer ends up putting more pressure on the industry to keep up with standards that are unrealistic for the situation on the ground, risking major scandals in the process. How do you think that you could bring more information to the consumer?”
“In terms of speciality cacao, I don’t think market information exists… There is literally no price information.” ~ Greg
Greg replies, “Good questions. In terms of access to market information, I could be wrong but I don’t think market information exists in terms of specialty cacao. You can look at Taza’s sourcing report and our sourcing report but trying to understand how much cacao is sold for specialty. Yellow Seed is trying to pull information together on that but literally it just doesn’t exist. There’s no place you can look at that information in a consolidated form. The way I have this information is I spend half of my year talking to people and gathering this information so that I know it.”
“To answer your second question, part of the goal of doing this is to put that information out there. Producers can get a better sense of how to price cacao. I’ve heard people come out and say…I want $15,000 per ton and I’m like…That’s really high and they’re like…Oh, is it? Because how would you know what’s high or low? There’s literally no information.”
Amoin clarifies, “By market information I meant do farmers have access to the commodity price?”
Greg responds, “Everyone knows what commodity prices are.”
Amoin responded, “A lot of the producers I’ve worked with did not.”
Greg continues, “People we work with in general have pretty good access to information. The producers we’re working with or someone who represents is able to provide a lot of good information. Also there is more and more access to the internet via mobile devices and things. In Tanzania, everyone has mobile phones and knows exactly what the cacao commodity price is. There’s actually a surprising amount of information. The problem is for specialty cacao. It’s very different and no one knows about [how to price for it].”
Someone asked, “How do the logistics work for you as far as these different markets and what is the impact on your production?”
Greg replied, “That’s a great question and it’s something that I meant to note that I hadn’t noted. [The price] varies a lot depending on how the logistics work. The short answer is sometimes we have very good information about it and sometimes we have basically no information. When we work with ECOM it’s easy because there is an FOB price that the producer gets and ECOM gets a flat fee per ton for doing the logistics. That part is easy. The one thing that is harder is like Madagascar. We buy directly from Berteil. He can tell us what the shipping fee was but that’s not the same thing as how much it costs them to do the logistics. We can only make a guess as to how costs were split up, namely how much it cost them to do logistics versus the costs for the cacao itself.”
Part 1 – Recommendations
Michael moved us into round of recommendations giving everyone an opportunity to share what he or she would do in Greg’s position.
Arianna recommends, “My suggestion is related to the part about trust that you mentioned at the beginning of the presentation. In my experience, what we’ve seen is that the thing that engages the farmers most within the system is when they get answers related to the question which they can control. If they ask how do you know how to find the market price of a certain crop and they get an answer immediately or in a short period of time, they engage more and they engage better.”
Anselm chimes in. “Before I get to the recommendation, Greg, I’m looking at your report and it’s really incredible. I think that never has so much transparency existed per ton of cacao traded.
[The group laughs.] And it looks like you have set up a small chocolate producing company in order to have a good excuse to travel to all the countries.”
Greg replies, “You’re not the first to say that.”
“Create narratives over the years you work with each individual source and see how their particular situation is changing from year to year.” ~ Anselm
Anselm continues, “It seems that you’re looking for a way to communicate, as you were saying, an apples to apples comparison between the different producers. Instead of comparing between sources, how about you create narratives over the years you work with each individual source and see how their particular situation is changing from year to year. From your point of view, like a hidden camera into the cacao supply chain, use it as an awareness tool around the changes you are seeing year to year as you continue to travel there and gather more and more information.
Greg responds, “That’s a great idea. As you were saying that, I realized we don’t give any historical perspective on how much we’ve bought from people, how much we’ve been paying, etc. Including that historical perspective as an evolving thing, rather than a snapshot is a really good insightful comment. Thank you.
Laura shares, “I’m much more focused on the farmer piece, than the consumer piece. From my experience with cocoa and with CocoaLink and working with the World Cocoa Foundation, it really resonated with me when you were talking about how the average consumer, even if they’re very educated in terms of their wanting specialty cocoa, don’t even necessarily know where cocoa is coming from. Given that I just really wanted to echo what Whitney and others were saying in terms of capturing that narrative and being able to communicate that human story at the consumer side.”
“It would be really interesting to equalize that ground and be able to bring stories to the farmer as well.” ~Laura
“One of the things that I experienced when I worked in Ghana in particular, was many farmers are really curious about the consumer. They hear from retailers and traders what the average consumer abroad wants, and I think it would be really interesting to equalize that ground and be able to bring stories to the farmer as well.”
Greg agrees, “That is a genius idea.”
Laura recommends, “Facilitating some of that two way communication either through technology or otherwise would really add value to what the consumer feels like they’re getting. I was going to say one other thing, someone else mentioned that they’re a Community Manager and one of the things I’ve been reading about community management is being able to use online spaces to create community around something like cocoa that a farmer ironically with their smartphone at this point, and a consumer, can ‘see through’ your brand. You showcase your brand through building community online about the power that chocolate can give farmers in terms of their livelihood regardless of the price they’re getting and also the “joy” chocolate brings to consumers, because it really does. You start talking about chocolate to anyone and they kind of just get a little happy.”
Greg replies, “That’s true. A great idea. And also there is a realization that cacao is an ecosystem of people working together to make this great thing that makes people happy. Being able to share more about that is powerful. We see big impact when people try the chocolate that we make with their beans and also share the feedback other people give about the chocolate we’ve made with their beans. There’s value.
Laura adds, “I agree. And coffee has done some really interesting things in this regard, for example, bringing espresso machines to the farm and talking about why there is a value to the consumer in the final product based on what the producer is producing.
Greg agrees, “Thank you.”
Amoin speaks to the point she made earlier about making decisions without having farmers represented in the conversation,“ At the same time too, if we are talking about informing the consumer and we’re talking about transparency, I think actually the consumer is kind of getting the short end of the stick too in a very big way. We assume the consumer to be a ‘one-track, 30 second attention span person.’ I think it’s not possible to be fair to the producer who has to feed his family and it becomes hard to be fair to the consumer who is assumed to be this child-like person who we need to feed colorful information to make an impact. We cannot really have transparency with that. Why? Because the product or the problem that we’re dealing with is intrinsically a very complex problem with many sides.”
There is not enough attention paid to understanding the consumer and the complexities of a consumer. The producer is not this child that we have a responsibility to take care of. I think that kind of frees the lion to put a lot more complex information in the consumer report. That doesn’t mean you have to break down the whole thing but it means you can provide information and understand that if the people have the brainpower to follow calculus or all types of media, then maybe they have the brainpower to follow this information as well.”
“I think that kind of frees the lion to put a lot more complex information in the consumer report.” ~ Amoin
Greg responds, “I’m 100% with you…Treat people like intelligent adults, which is what they are. And, in fairness, that’s exactly what we do today. I totally understand where you’re coming from and part of the reason I want to talk about this is what we have been doing is putting a lot of information out there and the response we have been getting for most of it is, ‘Whoa, that’s a lot of information! …And we don’t know how to process it.’ People in the industry love it and people outside the industry are like…’Whoo!’ What we’re trying to do is not dumb it down but put it in context so it’s easily understood. We want people to know the stuff, but we want to do it in a way that’s responsible.”
I (Nancy) add my thoughts, “I really like what you said about this idea of cacao in one way is “joy.” So if one aspect to quality is joy, how do you measure that? It’s one of those things that is not a result of a linear process or cause and effect scenario. Joy is ‘collectively verified’ or all a result of synergy of many things together.
I am curious to how technology can be used to crowd-source the information you are collecting, including story, experience, linkages so that the information is continuously updated and tracked over time. This is much what Yellow Seed aims to do and it would be fun to work with you or other makers to create this type of ongoing reporting for the industry at large. If data was coming from multiple stakeholders, it would be collectively verified and cost effective over time. For example, what if price data could be data mined from site transactions entered from each player that is involved in a collaborate trade.
In terms of the recommendations for the current challenge of creating a valid comparison, I agree to focus on tracking improvements over time, based on the goals defined by each producer group. I’ve also seen a metric used to show relative impact in a community as “the strengths of the exchange,” or what are you growing or promoting in that community with each purchase of cacao. You’re letting producers decide what is valuable to them, their goals and the price while tracking how together we can create progress towards those ends.
Greg replies, “It’s interesting. I’m sort of synthesizing all the comments you guys are making. One thing we could do is to not aim at these reports to consumers, rather gear the information for the industry. Consumers can read it and some of them might be able to glean information and it will create questions for the people looking for more information. That’s an interesting…”
David chimes in, “What has been done in some other sectors is they’ve reverted to storytelling, providing a story of continuous improvement. And you also serve as a conduit for communication among these producers.
Greg exclaims, “I actually introduce them to each other all the time. I spend a fair amount of time getting producers talking to each other.”
David continues, “I learned this early on when I would talk to tomato guys in the southern part of the valley and I would tell them stuff going on with wine grapes growing up in Washington and they would be fascinated to hear about those stories. Because you serve as a mode of communication about best practices, reporting, you’re improving the production side of things through this education.
David suggests, “I would also find out on a personal level what their goals are. Three years out what do they want to do as company, as an operation and then report that as a metric that you’re continuously improving too.”
Greg reflects, “If someone has goals you should honor that. In other words, are their goals being accomplished? For example, if they are focused on reforestation or conservation then we should tie the metrics in working with them back to reforestation or conservation.”
David agrees, “That is why we’re spending the effort…”
Greg fills in the blank, “so they can accomplish their goals.” That’s a really good point.
Rosi challenges, “What happens when their goals, metrics or process are very different than yours?”
Greg: “They’re always different.”
Rosi continues, “Let’s say you care about the rainforest and they care about their kid getting better clothing, a computer, or a phone and that’s what they want. They should be able to do whatever they want with their money.”
Greg: “It’s really funny. The guys we work with in the Dominican Republic…for every ton of cacao we buy, we buy a reforestation credit because that’s they care about is reforestation. We originally asked, ‘Okay, how do we help? They’re like…Well, how about you buy $200 worth of carbon credits. Fantastic…sold.’ So we’re buying tons of carbon credits.
I ask, “How do they define their goal and metrics and how do they track that progress?”
Greg adds, “Of all the people we work with, I more or less know what they’re trying to achieve. Sometimes it is visibility, sometimes it is fairness, and sometimes it’s gender equality. Everyone has different goals so then the question is how do we work with them to make it measurable?”
Michael brings us to a close, “I think we’re there. Thank you so much. Awesome input. I really appreciate everyone’s thoughtfulness on this.”
~The group takes a short break ~
Part 2 Mastermind with Daniel Domingo from Ecom Trading
Part 2 – Challenge
How to present market information (price, quantity, harvest time) in a meaningful way for both the farmers and end users of cocoa without standards, qualifications of what is “specialty” in place?
Michael asks Dan to share some background about Ecom and present the 2nd challenge.
Daniel Domingo relates his challenge to what Greg shared but Ecom is presenting a different side. “Ecom has been around since the 1800’s but Atlantic has been supplying to the specialty industry for the past 10 years now. We also supply to bulk chocolate makers and the bulk of the industry to producers of products such as butter and liquor so there is different usages for the cocoa. So we are looking at two very distinct sides of the spectrum; there are chocolate makers like Greg that are using the high end cocoa beans and the there’s also bulk chocolate makers and processors.”
“For us the challenge is, how do you present the information in a way that would be relevant to everyone? The chocolate makers and the cocoa growers, are both asking for market information like differentials and the information means different things to different people. Greg and Dandelion have done a really great job of understanding that information and making it meaningful, but there are people in the industry that haven’t necessarily reached that level of understanding on how to make chocolate, what is the background of the market and how it relates to the cocoa prices itself.”
“For me it is a little bit of a difficult situation in how to present the information in a way that is meaningful. For example, on one side, you have cocoa growers who hear that they can sell the cocoa beans for $10 – 15,000 dollars a ton. They automatically assume their cocoa is worth that much, so they expect to sell it as such. On the other side, if no one in the industry has been using this cocoa, that price would not have relevance to chocolate makers. It’s a difficult situation to navigate.”
Michael prompts, “Great. Can you give us a little more context or history of Ecom itself?”
Dan shares, “At Ecom we are traders of sub commodities. We do trading for cotton, coffee, cocoa obviously and oil states. Cocoa we have been doing it for quite some time now we have three processing plants that we own. We have one in Amsterdam, one in Mexico and we recently acquired a new one in West Africa. With all the mergers that have been going on with the top trade houses in the US, I would say we are probably in the top four of the cocoa traders in the US and that being said it is a bit different than the specialty cocoa side where we are not pushing nearly as much volume as you would see in the bulk side.”
I prompt, “Just to frame the challenge or the goal, you are looking to better understand the product demand and the value or price for each differentiated product in order to reward the farmer appropriately and also import more efficiently?”
“Many chocolate makers don’t have the opportunity to travel abroad or import the same amount of cocoa that would be relevant or worthwhile for them to import.” ~ Dan
Dan replies, “Correct. Greg has a way where he can go to visit the farms himself and decide which kinds of cocoa he wants to use for his chocolate. Other chocolate makers don’t have the opportunity to travel abroad or import the same amount of cocoa that would be relevant or worthwhile for them to import. So Ecom buys larger quantities of the cocoa and distributes it out to the smaller chocolate makers to reduce the cost of logistics and risk of shipment, storage and all those other things. It gives them a little bit more value. The challenge for us is we have to basically decide whether or not we want to go ahead and pre-purchase these beans, market them to clients and take on the risk of selling that product.
I clarify, “Right. So there is sort of an education of the distinctiveness and communication of the added-value of the higher priced product to both the maker and ultimately the consumer.“
Dan adds, “Yea, exactly. That is pretty tough. While everyone has access to the market, some chocolate makers who are new to the industry are just beginning to understand the market values and the levels of premium added for certain cocoa beans. There is an assumption that if the premium or differential is $70 over the market and the market right now is at $3,000, then I should be able to buy cocoa beans for $3,070 per ton right? No. You have to be careful. You have to realize you get what you pay for.”
Part 2 – Clarifying Questions
Laura asks, “What are the current ways Ecom is presenting market information? Have the models for other products that you are selling and trading been tested or proven?
“For the bulk industry we do have market information that we provide but for the there is not much market information for specialty buyers.”~ Dan
Dan responds, “For the bulk industry we do have market information that we provide but for the there is not much market information for specialty buyers. Part of the difficulty is there is lack of agreement or clarity around what clearly differentiates the industry. For example, is it the cocoa beans that make it special? Is it the amount of care that the farmer puts into the cocoa bean that makes it a specialty cocoa bean or is it the way the chocolate makers use it in the end? You can look at estimates and export figures. But the amount of cocoa beans that are being exported from countries that are considered specialty is way more than the entire specialty industry is consuming themselves. So how much is being used by the chocolate makers within that industry? Even at that point it is? There is a lot of gray area as to who are we going to define as a specialty chocolate maker, how much of beans exported are specialty beans and who the buyers or producers are. It is very difficult to get a very definitive answer on a lot of the information.”
Michael asks, “Are you getting pressure from both the makers and the producers for this information?”
Dan replies, “Both sides are requesting that information. And there are a lot more chocolate makers now than when I first started eight years ago, in the specialty side of things. And with the demand growth, the desire for different types of information has also grown quite a bit as chocolate makers are becoming a more educated and are looking for this information. At the same time the farmers want to know what their options are and what and what outputs they can have. The problem is sometimes they hear different information and it is hard for them to decide like what to use or how to use it.
We had a meeting at the WCF in El Salvador last year and a lot of new farmers were getting excited because they are listening to some of these large exporters who shared that they are selling it at a certain price and also exporting a large volume of cocoa. The farmers took way from the conversation that if they increased their volume, they could sell it at that price. That is not necessarily the case. These guys who are selling are large coops who have relationships with large manufacturers so they can use the cocoa and they have an outfit for it. For some of these smaller guys just to get into the industry is very, very difficult. Why would a chocolate maker decide to change their source of cocoa beans and use yours at the same price? It is a very difficult scenario.”
“What the producers don’t realize is specialty industry that is selling at high prices is a very, very small market.” ~ Dan
Rosi inquired, “What are the types of questions or information that buyers are requesting today?”
Dan responded, “Buyers are looking for more information as far as details of the farming communities, what type of bean is being used, where is it being grown and even the details of the genetics in some cases. 5-8 years ago the questions being asked were basically if the cocoa was certified, if it was organic, FairTrade or Rainforest Alliance. That was enough to qualify it as specialty.
Tuta chimes in, “Hi Dan, I’m Tuta, the farmer from Brazil. I think what I’m perceiving here is the lack of information is probably the main challenge. I guess it is still going to be an issue for a long time. It is a lot of information to get to the right people and some people that don’t have access to the information anyway and maybe don’t know how to interpret that information or don’t even have the means of doing it in a reasonable way. Just relating back to your issue, when I started researching, I found Yellow Seed, and I thought that the fact that someone could recommend a producer was amazing. For me, I am starting from scratch [in the specialty market]. But by having a referral from someone that knows the market and can promote that gives you a “guarantee” from this specialty market of someone who supposedly knows what they are doing is going back and saying that the cacao is okay. Maybe you guys at Ecom can vouch for it by having someone who is making cacao from that producer or a third party that can encourage others to buy.
I asked, “Something that came up in session 3 is that much of the information requested of you is redundant where you are answering the same set of questions over and over again. Do you see a way to streamline communication to buyers as demand and diversity of questions increase?”
Dan agrees, “That is something that we are definitely working on. We have some sheets and some forms that we hand out but for most of the regularly traded cocoa beans that we have in our inventory, yet most of our clients that are buying that stuff already know what is the background of it. It is something that we are trying to continue to move towards and are in the process of creating our own website.
The group discusses the options for creating a definition for specialty cacao and the challenges and limiting factors associated with it as well. There is agreement around the fact it is a differentiated product resulting in a higher price. We shift into recommendations in the interest of time.
Part 2 Recommendations
Greg starts us off, “So Dan, you guys have an opportunity to really set the stage for how people talk about these things. There are lots of organizations in the fine chocolate world who are full of sound and fury signifying nothing if you get my meaning. Where I feel like you guys actually have an opportunity to do this because you have a reputation and you are an active involved player. This gives you more credibility with almost every chocolate maker out there. The thing that is missing is it is important to define what chocolate makers can say about what they are using. Right now what happens is chocolate makers just make up anything they want. They will use a word that is different than the word other chocolate makers are using to make it sound cool and unique. I think there is room to be a little more restrictive to say these are the three terms you can use to describe it if you want to describe it by the producer. I think in doing that then you can start to get more towards what they do with wine in the Appalachians and have a sort of stricter definition.”
“I think one thing you guys can do is institute more specific information about cacao.” ~ Greg
I think one thing you guys can do is institute more specific information about cacao. I honestly can’t tell a chocolate maker what to do but you can certainly ask them if this is what your recommendation is. And my experience with chocolate makers is you give a recommendation they will do it. Most of them are looking for some kind of guidance in like what to call the thing that they are working with. So that is my recommendation to you honestly would be like start instituting something similar to like an Appalachian model that they use in the wine industry.
Dan responds, “Yeah, the one thing that concerns me about doing something like that is you kind of don’t want to be the person that is going to put baby in the corner. The specialty chocolate industry has the opportunity to come up with your own process of making chocolate and innovations that include different ways of doing things. I don’t want to put a limit on what is possible. For example, restricting them as far as the flavor profiles or other properties that they can use in their chocolate would be a little bit unfair.”
“Provide terminology or a way of how to refer to the beans you are using. The way the Appalachians works is it says, if you are using these grapes, then this is the word you can use to describe those grapes.” ~ Greg
Greg adds, “Not telling them what they can do with the beans as much as providing terminology or a way of how to refer to the beans you are using. The way the Appalachians works is it says, if you are using these grapes, then this is the word you can use to describe those grapes. I think this narrows the conversation dramatically for chocolate makers and it would help producers a lot because it helps them build a brand for the thing they are trying to produce.”
David shares, “I will offer a recommendation based on some other cropping systems. The California Olive Oil industry just went through this process for several years where someone created an ‘extra triple super duper’ version. It gave a sense of a “a free for all” and “I’m going to call it what I want” feeling to the industry. As a result, consumers lost all trust, value, and understanding, [of the meaning of the grades]. Retailers could not sell it. So there had to be some sort of minimal framework put together that these standards is what delineates a virgin vs. extra virgin. The same thing goes with Napa wines – Mondavi is a great guy to follow. In the 40s there was French wine and then there was wine. Mondavi in the 40s said we are going to market that this is a Napa thing. And when Napa got big if you are anywhere near California you had Napa wine. So now there is delineation on exactly what a Napa wine means. It means you have 85% of the grape in this appellation. You can still create merlot, cabernet, whatever variety and taste you want. There are some common sense framework that has to be put in place. I just feel like the specialty cacao is in that realm right now to where you can get a handle on it now then you can leverage that infrastructure for retailers, marketers, producers.”
I (Nancy) chimed in, “This is really a fun challenge, Dan. What I hear is how can Ecom be of service and a conduit to a bridge to many sides without having information overload and without also being the authority to define and set something. And there may be opportunity to create a framework that evolves as the industry learns together. These are all things Yellow Seed has thought a lot about.
For me, this challenge feels like an opportunity to create a process that supports the flow of diverse information and can adapt as new information surfaces. For example, like a way to crowd-source the defining of flavors, names and verification of these definitions.
It’s interesting having Hylo in the room, as they have a community platform and message system that allows for self-organized and self-directed projects to form as needed.
“Say for example, you create a project around Greg is going to organize a container from an origin for 10 chocolate makers. The group uses the site to agree upon purchase preferences, commitments and discussion around trip experience and quality. For example, maybe 2-3 people have visited the origin and others have done the sensorial analysis. It’s a way to get on the same page and make decisions together via integration with Loomio,
It would be interesting to use an open source sensorial analysis rating process from people who are trained together such as the work from Carla Martin and FCCI are doing. Technology could help aggregate this input and provide feedback for producers. There is a certain level of automation with crowd-source tools allowing information to continuously stream together giving you both a snapshot in time and record of process over time. In this way the industry can learn together without much effort. And this information of course, drives markets and can be used to negotiate orders and prices.
Ecom’s role in this process is simplified, providing the beans and services to move the beans that match user preferences. Redesigning frameworks for collaboration or partnering to do so is my recommendation.
~ The group closed with a round of thanks and final thoughts. A sense of excitement and possibility filled the room and many stayed for another hour chatting through ideas and forming partnerships and friendships.
“I think I learned more in four hours than I could research in like a whole year. I am honored to be able to have met you guys and hopefully continue to be able to be part of the process and learn more and contribute in whatever way I can. I think this initiative is amazing and is what is needed.” ~ Tuta
~ end of session
Thanks for piloting Collaborative Trade with us. That’s a wrap for this series. Email nancy(at)yellow-seed.org if you’d like to co-host or participate in more.